Our comprehensive guide to financing real estate investments

Real estate is a proven path to building wealth. But here’s the truth: investors who treat financing as a one-time hurdle often stall out after their first deal. Instead, think of financing as a strategic tool — one that can unlock scale, boost returns, and provide the flexibility to grow a portfolio over time.

That’s where understanding the risks and opportunities in real estate finance and investments becomes critical. From debt-to-income caps to interest rate swings, the financing decisions you make today directly shape your ability to buy tomorrow.

Ready to level up your growth? Download our ultimate guide to financing real estate investments for strategies, comparisons, and investor-tested insights.

In today’s market, investing in real estate means more opportunity — and flexibility — than ever. With housing in short supply and platforms like Airbnb making property management easier, both short-term and long-term rentals remain in demand. And when done right, investment properties bring more than just monthly rent checks:

• Passive income: Rental income provides consistent cash flow that can cover mortgage payments, operating expenses, and still leave profit to reinvest. Short-term rentals, in particular, can yield enticing nightly rates in popular markets.

• Portfolio diversification: Real estate is a tangible asset that balances out exposure to stocks, bonds, and other investments. It also tends to behave differently in economic cycles, adding stability to your overall financial picture.

• Appreciation-driven equity: Over time, property values generally increase. That appreciation builds equity you can leverage through cash-out refinancing, a HELOC, or other financing to fund your next acquisition.

• Tax advantages: Investors may be able to deduct mortgage interest, property taxes, depreciation, and certain expenses. Always consult a tax advisor regarding the deductibility of interest and charges, but these benefits may significantly boost your net return.

Every investor has a different starting point, which means your financing path depends on your unique situation. A few key factors to consider:

Conventional and DSCR (Debt Service Coverage Ratio) loans may require higher scores (often 680+), while HELOCs (Home Equity Lines of Credit) can be leveraged by those with lower credit scores (600+). Whichever financing option you choose, strong credit typically means better rates and terms.

W-2 employees often fit neatly into conventional underwriting. Self-employed borrowers may find DSCR or bank statement loans more flexible, since these rely on property performance or cash flow instead of tax returns.

Most investment property financing requires 20% to 25% down, which impacts your upfront capital and return calculations.

Interest rates, home values, and lender requirements can shift quickly. A rising-rate environment can reduce cash flow, while a hot rental market can boost returns.

Consider vacancy risk, interest rate volatility, and liquidity. Broader economic shifts — from housing supply shortages to regional rental demand changes — can impact occupancy, rent prices, and resale values. Investors should stress-test their financing assumptions against possible downturns.

With your financial baseline set, it’s time to explore your options. The right financing doesn’t just close today’s deal — it positions you for smarter leverage, stronger cash flow, and the ability to scale over time.

Today’s investors have more choices than ever. Here’s a side-by-side comparison of common investment property financing tools:

A conventional loan is a standard mortgage typically offered by banks or credit unions, most often used by investors with a W-2 job buying their first or second rental. Because lenders rely heavily on personal income and limit how many properties you can finance, conventional loans can become restrictive as you try to scale

• Best for: W-2 investors, limited properties

• Pros: Low rates, stable terms

• Cons: Strict guidelines, limited property count

• Typical requirements: 620+ credit, 20% to 25% down

A DSCR loan is financing that qualifies you based on a property’s rental income rather than your personal income. Lenders look at whether the property generates enough revenue to cover its debt payments. 

• Best for: Rental income investors

• Pros: Qualify based on property cash flow, scalable

• Cons: Slightly higher rates

• Typical requirements: DSCR greater than or equal to 1.0, 680+ credit

Designed for self-employed investors and business owners, bank statement loans offer an alternative to W-2 documentation. Instead of tax returns, lenders review up to two years of bank statements to verify income.

• Best for: Self-employed investors

• Pros: No tax returns required

• Cons: Higher rates, manual review

• Typical requirements: 12 to 24 months of statements

A fix and flip loan is short-term financing used to buy, renovate, and quickly resell a property. Approval is often asset-based, and funds are released quickly so investors can move fast in competitive markets.

• Best for: Rehab/resale investors

• Pros: Fast access, renovation-friendly

• Cons: Short-term, higher cost

• Typical requirements: Asset-based approval

Useful in competitive markets that require quick action, a bridge loan is temporary financing that “bridges” the gap between buying a new property and securing long-term financing or selling another property.

• Best for: Quick capital needs

• Pros: Fast, flexible

• Cons: Higher interest, short term

• Typical requirements: Clear exit strategy

Secured by your home equity, a HELOC is a revolving line of credit. It allows you to borrow, repay, and re-borrow as needed — often used for renovations, new purchases, or bridging gaps.

• Best for: Equity-rich homeowners

• Pros: Flexible, revolving credit

• Cons: Variable rates^{5: Navigates to numbered disclaimer} (Figure also offers a fixed-rate HELOC^{1: Navigates to numbered disclaimer})

• Typical requirements: Equity, good credit

Want clarity on which real estate financing option fits you? See the decision tree in our guide to map the best option to your investing strategy.

Financing isn’t just about getting approved — it’s about structuring your path to long-term growth. Whether you’re pursuing your first deal or scaling into a multi-property portfolio, these five moves can set you up for success:

Review your credit score, income documentation, and available equity. This baseline determines what products you may qualify for and the terms you’ll be offered.

Are you looking for maximum monthly cash flow, rapid scaling, or entry into new markets? Align your financing strategy with your goals — a DSCR loan may fit for scaling, while a HELOC might unlock capital from existing equity.

Conventional loans can be a great entry point, but may limit growth. DSCR loans let you expand based on property income, while HELOCs provide flexible equity access. Investment property loans like fix-and-flip or bridge financing work for shorter-term plays.

Prequalification puts you in a strong position to act fast when opportunities arise. By getting prequalified for loans for your investment property, you’ll have clarity on budget and speed to close — critical in today’s competitive market.

Your strategy today may not be your strategy tomorrow. As markets shift and your portfolio grows, revisit your financing. Refinancing, reinvesting, and restructuring can extend your growth runway and keep you ahead of the curve.

Explore six different investor profiles in our guide and find the right financing route for you.

Not all lenders are built with investors in mind. Traditional banks may be a fit for your first property, but investors can hit roadblocks once they expand: income caps, slower timelines, and rigid requirements.

Digital lenders like Figure are designed for scalability, offering:

• Speed – Close HELOCs and DSCR loans* in as few as 5 days^{2: Navigates to numbered disclaimer}

• Transparency – 100% digital application process, soft credit checks for prequalification^{3: Navigates to numbered disclaimer}, and clear disclosures.

• Flexibility – Loan amounts up to $1M for DSCR loans^{4: Navigates to numbered disclaimer}, no property count caps, and fast access to equity through HELOCs.

*Five-business day funding timeline assumes active borrower engagement and opting-in to the use of third-party API underwriting tools. Funding timelines will be longer for loans requiring a full field appraisal.